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Topic: Barco Getting into Servers Etc.
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Terrence Meiczinger
Film Handler
Posts: 45
From: Orono, Me, USA
Registered: Dec 2008
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posted 04-19-2012 10:50 AM
The material costs are only one component that determines the selling price.
For example, I did some consulting work for a company that did hardware. They were developing a data processing card that went into a standard PC. When it was done, the board cost about $500 to manufacture. They sold them for $100,000 each. One because they only expected to sell maybe 20 units and two the R&D costs were well over $500,000.
When I did work for say Cisco, that same type of thing would sell for under $1,000 because they expected to sell hundreds of thousands of units.
The market for digital cinema isn't exactly huge, so R&D, marketing, etc costs come into play as much as material costs.
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Scott Norwood
Film God
Posts: 8146
From: Boston, MA. USA (1774.21 miles northeast of Dallas)
Registered: Jun 99
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posted 04-19-2012 08:06 PM
As mentioned above, the manufacturing cost per unit is irrelevant. I work for a software company (in the aerospace industry, not the cinema industry) and our software is distributed by FTP. Manufacturing cost is zero, but we still charge upwards of $30k per license because it is a product for a limited market, and the development, sales, and support cost is substantial.
There is a total worldwide market of about 100k units for D-cinema servers, assuming one per cinema screen. With an expected lifespan of 5-10 years, that means that the annual sales volume of all servers combined is 10-20k. Divide that among half a dozen or so vendors, and the annual volume gets really small. Furthermore, there is an expectation of support for a number of years, as well as sales and marketing costs, software development costs, etc. And this is a market with very limited growth potential. At least the projectors have a larger potential market; the servers, however, are really quite useless outside of the cinema environment.
Considering that, I don't believe that $10-15k (or whatever the things go for; I don't sell them and haven't bought one) is unreasonable if the product and support are good.
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